PowerRatings Best of the Requests: KO, CVX, MCRL
Stocks that active investors have been studying over the past 24-hours at PowerRatings.net include the world’s most popular soft drink company, and a number of sub-par, low PowerRatings stocks in otherwise top-rated industries.
It is little surprise that investors and long-term traders are turning their attentions toward Coca Cola [KO@KO]. Analysts recently upgraded Coca Cola after determining that the company was likely to benefit greatly from increased sales overseas – especially in Latin America.
Coca Cola has a Long Term PowerRating of 8. Our research, involving thousands and thousands of simulated stock trades between 1995 and 2007, indicates that stocks with Long Term PowerRatings of 8 have been higher one year later more than 74% of the time. Compare this to the average stock, which has been higher less than 68% of the time.
Coca Cola is the highest PowerRating stock in the Beverages – Soft Drinks industry, which has an “average” PowerRating of 6.
Coca Cola is also the only high PowerRating stock in our Best of the Requests list for today. And while there are a number of low, Long Term PowerRating stocks also on today’s list, what is interesting is that these low PowerRatings stocks often come from industries with high PowerRatings. Does this mean that we can go straight to those industries and find better stocks than the ones investors are currently researching?
Let see what we find. For example, investors were doing some PowerRatings research on ConocoPhillips [COP@COP] which has an “average” Long Term PowerRating of 6, but belongs to the 10-rated Major Integrated Oil and Gas industry. Surely, there is a higher rated stock in this top-rated industry than ConocoPhillips, right?
You better believe it. Looking at the list of stocks that make up the Major Integrated Oil and Gas industry, we find a stock like Chevron [CVX@CVX] which has a Long Term PowerRating of 8. We even find three stocks in this industry with Long Term PowerRatings of 7 which, while not the sort of truly high Long Term PowerRatings we prefer to see in stocks, still represents a superior opportunity – all things considered – to a 6-rated stock like ConocoPhillips.
One more example. Investors were curious about Broadcom [BRCM@BRCM], according to our PowerRatings Most Requested list. However, Broadcom has a Long Term PowerRating of 3 – a rating that suggests investors should “consider avoiding” the stock. At the same time, Broadcom belongs to an industry group – Semiconductors – Integrated Circuits – with an Industry PowerRating of 8. This suggests that there are better stocks for active investors in this group. Can we find them?
There are no high Long Term PowerRatings articles in this industry group. However, for active investors who feel that they have to have a semiconductor stock in their portfolio, there are clearly superior choices to Broadcom. Perhaps the best alternative is the 7-rated Micrel Inc. [MCRL@MCRL], though there are five other stocks which, while only earning Long Term PowerRatings of 6, are still better bets than a 3-rated stock like Broadcom.
Looking for more long-term solutions to your investing problems? Don’t let the volatility of this market lead you to miss out on stocks you’ll be glad to have bought a year from now.
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David Penn is Senior Editor for PowerRatings.net.